Saudi Arabia restructures oil giant Aramco

DUBAI/KHOBAR, Saudi Arabia, May 1 (Reuters) - Saudi Arabia
is restructuring the world's biggest energy company, Saudi
Aramco, in a move apparently aimed at letting it
operate more at arm's length from the powerful oil ministry.

Analysts expected technocrats to get a freer hand in running
the state-owned giant. Some said the restructuring might be the
first step in a shake-up of the Saudi energy sector, and could
possibly pave the way for a prince to take over the ministry
itself, which is traditionally run by industry experts rather
than members of the royal family.

Citing unnamed sources, Saudi-owned Al Arabiya TV reported
on Friday that Aramco would be separated from the oil ministry
of the top OPEC member. Aramco officials could not be
immediately reached for comment but Arabiya's reports closely
reflect official thinking.

Mohammad Al Sabban, a former senior adviser to oil minister
Ali al-Naimi, said the move would strengthen Aramco. "This
decision will bring more flexibility to the company to take
decisions on a commercial basis, and keep full financial
control," he said.

Conventional thinking is that the ruling Al Saud family
views the oil minister's job as so important that giving it to a
prince might upset the dynasty's delicate balance of power and
risk leaving oil policy hostage to princely politicking.

But Ehsan Ul-Haq, oil analyst at KBC Energy Economics, said
it was highly likely that Prince Abdulaziz bin Salman, a son of
King Salman, could be appointed to replace 79-year-old Naimi,
who has been oil minister since 1995.

The king promoted Prince Abdulaziz, long a member of Saudi
Arabia's OPEC delegation, to deputy oil minister from assistant
oil minister earlier this year. Some diplomatic and Saudi
sources have suggested his years of experience might overcome
the hurdles to a royal becoming oil minister.

"They are trying to rearrange Aramco and restructure the
whole company. They are also trying to restructure the oil
ministry and name Prince Abdulaziz as minister of energy," said
an industry source in Saudi Arabia.

"So that way, Aramco will be totally business-oriented, not
an arm of the petroleum ministry."

MAJOR RESHUFFLE

Aramco was once U.S.-based and run by Americans but has long
been a Saudi state corporation. It dwarfs all others in the
industry, with crude reserves of 265 billion barrels, more than
15 percent of all global oil deposits.

It produces over 10 million barrels per day, three times as
much as the world's largest listed oil company, ExxonMobil
, while its reserves are more than 10 times bigger. If
Aramco were ever to go public, it would probably become the
first company to be valued at $1 trillion or more.

As part of a major reshuffle on Wednesday, King Salman moved
Khalid al-Falih from chief executive to chairman of Aramco and
also appointed him health minister -- changes that may indicate
Falih will not become oil minister, Ul-Haq said.

"(Falih's) shift to the health ministry suggests that he
might not follow Naimi. His appointment to the chairman of
Aramco, on the other hand, is only ceremonial," he added.

Aramco's senior vice-president Amin al-Nasser has been named
acting chief executive until further notice, the company said on
its Twitter account on Friday. Earlier, it had posted a
statement saying Aramco has a new 10-member supreme council
headed by the kingdom's deputy crown prince.

"Restructuring of Saudi Aramco includes separation from the
petroleum ministry."

The Supreme Economic Council, formed by King Salman earlier
this year, replaces the Supreme Petroleum Council, which used to
help set the kingdom's oil policy.

The new council is headed by Deputy Crown Prince Mohammed,
another son of the king, a move seen by analysts as laying the
ground for a generational shift in how Riyadh develops its
energy and economic strategies.

The main tenets of Saudi oil policy -- including
maintaining the ability to stabilise markets via an expensive
spare-capacity cushion and a reluctance to interfere in the
market for political reasons -- are set by the top members of
the ruling Al Saud family.

Oil minister Naimi, who has seen several oil price crashes
during his tenure, was the driving force behind OPEC's decision
in November not to cut production to support prices, which have
halved since June 2014, but rather maintain its market share.

On Thursday, Naimi was quoted as saying that King Salman's
appointment of two new heirs would help stabilise world oil
markets by strengthening political stability in the kingdom.
(Additional reporting by Christopher Johnson in London; Editing
by Catherine Evans)